Confusion Over Mother’s Estate Plan Leads to Siblings’ Court Battle

A mother of six adult children owned a home in San Luis Obispo County. She lived in the house with one of her sons and his wife. The couple, together with two of the other children, gave their mother money each month to help pay her mortgage.

In 2007, the mother signed a form will in the presence of an attorney. The will left the house to the son and daughter-in-law who lived with her. She simultaneously signed a deed transferring the house to the son while reserving a “life estate” for herself. This is a common estate planning device, but not usually favored given the problems that arise in this case. Basically, the mother became a “life tenant” of the house, and upon her death, the son would assume sole ownership.

Two years later, the relationship between the mother and her daughter-in-law deteriorated. The daughter-in-law told the mother she no longer owned the house and could be kicked out. At this point, three of the mother’s daughters arranged for her to meet with a new estate planning attorney. The daughters were aware of the 2007 will leaving the house to their brother, but not the deed conveying the property to him with a life estate for their mother. The mother told the new attorney she now wished to leave the house to one of her daughters. Accordingly, she signed a new will, together with a document giving her daughter power of attorney.

A few months after that, the daughter wanted to arrange a reverse mortgage on the house. This is another common estate planning tool. A reverse mortgage is a loan that the borrower does not have to pay back during his or her lifetime. After their death, the lender has priority claim on the mortgaged property, which may be sold to pay the balance of the loan.

Because of the 2007 deed, the mother no longer held legal title to the property. The son nevertheless agreed to transfer the property back to his mother, because he wanted to be free of his obligation to financially support her. He signed a new deed in June 2010. The mother died about three weeks later.

The mother’s estate planning attorney quickly moved to probate the new will, which left the house to the daughter. The son was properly notified of the probate. He did not file an objection with the probate court, and the will was formally admitted.

After the fact, the brother sued the sister, arguing the second deed conveying the house back to their mother should be rescinded. But it was too late. The probate court, and later the Court of Appeal, explained the earlier probate order admitting the will was binding. The son already had an opportunity to object and failed to do so.

How to Avoid This Scenario

The above case is merely an illustration and should not be treated as a complete statement of California probate law. Sibling arguments over an inheritance are commonplace. Good estate planning should prevent such arguments from spilling over into court after a parent’s death. That is why it is important you seek advice from an experienced California estate planning attorney who can help you navigate the potential minefield of their children’s squabbling. Contact the Law Office of Scott C. Soady in San Diego if you would like to speak with an attorney right away.

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